Both stallions are very nice, each offering something different. Davy being the "foundation" type and Cascade the more modern "show ring" type.
What the person saw in Davy's knee is a healed fracture. That is why he cannot be ridden. His knee is pretty misshapen from when a stallion attacked him years ago.
I have had the pleasure of knowing Kim (the stallion owner) for a few year and she and her husband are WONDERFUL, HONEST people. In fact, my mare was bred by them. They have the nicest Fox Trotters on this side of the States I believe.
As to your mare, I would also vote Davy as she needs a shorter back and better coupling. Most gaited horses are a bit over-angulated in the hind legs. As long as it isn't excessive, it usually doesn't cause any problems.
Anyway, would love to hear what you decided :)